European Stocks Lower; Russian Gas Move, Bank Earnings in Focus
European stock markets traded largely lower Wednesday, as investors digested ramped up geopolitical tensions, a troubled global growth outlook as well as mixed quarterly corporate earnings.
By 4:05 AM ET (0805 GMT), the DAX in Germany traded 0.3% lower, the CAC 40 in France fell 0.1%, while the U.K.’s FTSE 100 climbed 0.2%.
Tensions over the Russia-Ukraine conflict were heightened Wednesday after Gazprom, Russia's state-owned energy giant, confirmed that it has stopped supplies to Poland and Bulgaria.
It's the first time that Russia has interrupted supplies to EU members in over 40 years of shipping natural gas, caused crude prices to rise and increased concerns about Europe’s energy security.
Russia is demanding payments for its gas in rubles as sanctions over its invasion of Ukraine bite, something that most western countries are not prepared to comply with as that could undermine the sanctions.
By 4:05 AM ET, U.S. crude futures traded 0.2% higher at $101.86 a barrel, while the Brent contract rose 0.2% to $104.84. Both benchmarks gained around 3% on Tuesday.
European equity indices have also been pressured by worries that China’s insistence on stringent COVID restrictions will harm domestic and global growth as well as the hawkish pivot from the Federal Reserve potentially slowing growth at the world’s largest economy.
These factors resulted in consumer confidence in the euro area’s two biggest economies falling more than anticipated. In Germany, data dropped to an all-time low, while French figures declined to the lowest since 2018.
It’s a big day for earnings in Europe, with the banking sector once more to the fore.
Deutsche Bank (ETR:DBKGn) stock slumped 5.6% after the German lender warned that the Russia-Ukraine conflict could hurt full-year results, saying its funds set aside for credit losses are expected to increase "significantly" this year.
Credit Suisse (SIX:CSGN) stock fell 1.6% after the Swiss bank posted a first-quarter loss along with another set of top management departures.
By contrast, Lloyds (LON:LLOY) stock rose 2.4% after the U.K. lender lifted its full-year outlook with demand for mortgages holding up even as it warned of the dangers to the British economy from higher inflation.
Elsewhere, GlaxoSmithKline (NYSE:GSK) stock rose 0.7% after the pharmaceuticals giant beat expectations for its first-quarter results, helped by buoyant sales of its COVID-19 treatment.
Mercedes Benz Group (OTC:DDAIF) stock rose 1.4% after the carmaker confirmed its guidance for the full-year with high prices making up for supply chain troubles, Telia (ST:TELIA) stock advanced 1.1% after the Swedish telecoms operator posted better-than-expected quarterly earnings, and DSV (CSE:DSV) stock climbed 2.7% after the Danish transport company raised its 2022 outlook.
There were also significant earnings after Tuesday’s close on Wall Street, with Google parent Alphabet (NASDAQ:GOOGL) reporting first-quarter revenue below expectations, while software giant Microsoft (NASDAQ:MSFT) forecast double-digit revenue growth for its next fiscal year.
There are more significant U.S. earnings releases Wednesday from companies such as Meta Platforms (NASDAQ:FB), T-Mobile (NASDAQ:TMUS), and Boeing (NYSE:BA).
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